Free Trade Ruling Could Nix Country-of-Origin Labels on Meat

If you want to know where your meat came from, you won't be happy with the World Trade Organization right now. Late last week, the WTO announced that the United States' country-of-origin labels, which took effect in 2008, discriminate unfairly against foreign meat suppliers such as Mexico and Canada.

Some consumer groups were outraged by the WTO's decision; the beef industry, not so much. The ruling could mean that the U.S. will have to abandon those labels, but hang on, maybe not. In the world of international trade, the wheels of justice turn very slowly indeed. Years are likely to pass before you'll see any change in those food labels, as U.S. officials figure out a way to comply with the WTO ruling.

In fact, officials at the Office of the US Trade Representative are holding out hope that the labels will survive. They point out that the WTO didn't object to the labels themselves, but rather the system for implementing them.

Here's the difficulty with that system. Unlike, say, corn fields, animals tend to move around, so it's a little more difficult to say where they came from.

Take the case of beef cattle that were born in Mexico, but arrived in the U.S. as calves and grew to adulthood here, says Colin Woodall, from the National Cattlemen's Beef Association. Under the U.S. labeling system, meat from those animals is labeled as coming from the U.S. and also from Mexico. To make sure the right label goes on that meat, a meat packer typically will keep those animals separate from the much larger number of U.S.-origin animals, which costs time and money.

As a result, says Woodall, meat packers avoid animals from foreign countries or pay less for them. This is the root of the discrimination against foreign livestock, and one basis for the WTO judgment. U.S. officials are now hoping that they can find creative solutions that will make it easier for meat processors to handle foreign livestock.

Canada and Mexico, which brought the WTO case against the U.S., have proposed their own solutions, but their proposals aren't likely to please consumer advocates in the US. The first is simply to make the labels voluntary. If this happened, consumers would likely only see labels that might convince them to pay more — such as U.S.-origin, local, or grass-fed beef.

Another alternative: Canada has proposed that a cut of meat's "country of origin" could be the place where that cut of meat acquired its current form — that is, the meat packing factory. All meat from that factory would display the same origin, no matter where the animals were born or raised.

A third alternative doesn't water down the labeling requirements, but instead goes far beyond them. Both Canada and Mexico have proposed that the U.S. set up a detailed "trace-back" system that would link every piece of meat, via bar codes on the package, with individual animals (or perhaps small groups of animals that all came from the same place). Such tracking systems, which have been talked about stateside for years as well, would likely add to the expense of handling all meat, not just meat from foreign sources, so there should be no reason to discriminate against animals who lived abroad. Voila! No problems with the WTO.

If American officials have any ideas of their own for how to create a non-discriminatory labeling scheme, they haven't shared them with the public.

They do have some time to think. The WTO decision will become final in about a month, and the U.S. has 30 days after that to declare its intention, and another year or so to comply.

Or not comply. That's also an option, as the European Union demonstrated by sticking with its ban on beef from cattle treated with growth hormones, which the WTO declared a violation of free trade in 1998. If the U.S. went the route of non-compliance, the WTO would have to estimate the economic damage that these labels cause to Canada and Mexico, authorizing trade retaliation by those countries.

That seem unlikely, though. Tim Reif, General Counsel for the Office of the US Trade Representative, went on the radio show AgriTalk on July 2 and said that "when we receive a ruling from the WTO, we do our darnedest to comply and do what the WTO has asked us to do."

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